Protests put brakes on ITES

GAO expects to rule on objections from 5 firms by August

By Brian Robinson

May 15, 2006

A series of protests against the award of the $20 billion Information Technology Enterprise Solutions 2 Services (ITES-2S) contract has cast some doubt on the future of a program of vital importance to the Army’s development of a global network-centric enterprise. It has also shined a spotlight on the Defense Department’s commitment to performance-based procurements.

The Government Accountability Office expects to decide on the merits of the protests by Aug. 11. They were filed at the end of April and earlier this month by BAE Systems North America, NCI Information Systems, Northrop Grumman, Multimax and Pragmatics.

The thrust of the protests is that the Army indicated it would evaluate bids based on best value, then made the awards based on price.

Most GAO protests are denied, said Ray Bjorklund, senior vice president and chief knowledge officer at Federal Sources. Nevertheless, he said, ITES-2S is an important vehicle, and the protest process will slow down the transition to it.

“It’s a preferred contract vehicle for the Army,” he said. “So when any of the large contractor incumbents [on the original ITES contract] don’t win, that cuts off a large part of their potential revenue, and the likelihood of them filing a protest goes sky high.”

Of the protestors, Northrop Grumman and NCI are incumbents.

The Army has other options for now, including the original ITES-Enterprise Mission Support Services Solutions contract, Bjorklund said.

The General Services Administration schedules also provide many of the same services that ITES-2S will offer. However, DOD has taken a dim view of using non-DOD contracts recently, and that may make it less appealing for contracting officers to turn to GSA or other outside options, he said.

ITES-2S is expected to be the cornerstone of the Army’s IT procurement in the next decade, though other military services and civilian agencies are expected to make use of it as well. It’s a follow-on to the $1 billion ITES-EMS3, which was awarded in 2003 but quickly began to climb toward its ceiling.

It’s also a showcase of sorts for DOD’s move toward performance-based contracting, which is a major break from its traditional requirements-based procurements.

Performance-based contracts, in which agencies tell contractors what their needs are and allow the contractors some freedom in meeting them, require agency officials to take a different approach than more traditional contracts that feature a detailed set of requirements for contractors to follow.

Although neither the Army’s Program Executive Office for Enterprise Information Systems (PEO-EIS) nor the protesting companies would comment on the specifics of the protests, the indications are that disagreements over whether the Army fairly evaluated the offers triggered them.

Multimax, for example, made reference to three evaluation factors it said the request for proposals laid out, with mission support and performance risk rated as more important than price.

The Multimax protest said the Army made no effort to assign a weight to price consistent with the RFP’s admonition to treat the non-price evaluation factors as “significantly more important” than price.

Other companies are believed to have included similar complaints in their protests.

In general, this continued emphasis on the lowest price is a worrisome trend on the part of DOD, said Bob Guerra, a partner at Guerra Kiviat who believes the emphasis now should be much more toward best value.

“I don’t understand why [the Army] continues to do this,” he said, adding that, if price is a part of the evaluation process, it should be more a case of “price reasonableness and not low price.”

The winners (so far)

The Army awarded the $20 billion Army Information Technology Enterprise Solutions-2 Services contract to 11 companies. Five who lost the bid are protesting. Pending any changes that may occur because of the protests, the winners are:

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